BPOs: Medium-to-long term outlook positive

June 09, 2009 14:00 IST

The slowdown-hit business process outsourcing industry is likely to face better times in the medium-to-long term and the downturn gives opportunities for Indian firms to acquire businesses abroad, industry officials said on Tuesday.

IT and BPO industry body Nasscom's chairman Pramod Bhasin said the industry faced a 'brutal year in many respects' in the last financial year and the companies and customers were passing through 'extraordinary pain'.

As a result, BPO customers are undergoing restructuring, internal and management changes and change of decision-makers, he said at the Nasscom's BPO Strategy Summit 2009 in Bangalore.

But Bhasin, also CEO of Genpact, said the medium-to-long term outlook for India's BPO industry is 'outstanding'. He added: "Next quarter. . .next nine months. . .who knows. . .we will find out".

Officials said India's BPO sector had been growing at a compounded annual growth rate of 37 per cent before global slowdown stopped it in its tracks.

A relatively new industry, the BPO sector grew from being a $1.6 billion industry in 2002 to $14.5 billion in 2008-09. In the same period, employee headcount in the sector grew from 155,000 to about one million now.

He said it's a good time for Indian BPO players to go in for acquisitions and buy assets in the US as valuations have become cheap.

Executive chairman of EXLService.com, Vikram Talwar, said the 'pain' being experienced by India's BPO industry is 'immense'. BPO players are facing immense amount of pricing pressures.

He added that for India's BPO players, it was going to be 'value game going forward'.

Officials said given the sharp rise in unemployment rate in the US, the growing number of anti-outsourcing American voices was justified.

Bhasin said: "We must be extraordinarily sensitive to the issue of job losses in America. . .England and Europe".